IOSCO has initiated an analysis of the prudential standards governing broker-dealers and other securities firms to assess the need to rewrite its 1989 capital framework.  Although the study found general adoption around the world of capital and similar standards, it also determined that these vary widely both in content and scope.  This creates opportunities both for risk and regulatory arbitrage, problems IOSCO may address with new global standards once comment is received on this consultation.  While an overall rewrite of securities capital regulation will take considerable time, new standards for the largest securities firms could be finalized far more quickly and pose particular challenges to U.S. broker-dealers, futures commission merchants, mutual funds, and similar enterprises.  The SEC may also pre-empt global standards by near-term action to address liquidity risk at broker-dealers that may include a new leverage requirement.

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